#feesmustfall: Just who enjoyed the benefit?

For years National Treasury has been reluctant to hand out any benefit that cannot be sustained on the long term.

Well, on Friday afternoon President Zuma did just that!

The rough assessment of the cost of a 0% fee increase is R3bn. And in the context of state expenditure of R1,2 trillion for 2015/16 that’s actually not a lot. Hopefully the universities will be compensated accordingly. As a rough and ready estimate Rhodes University will be out of pocket by R20- R25 million, perhaps more.

But after last week’s performance there can be no doubt that the demands have just started. So there can be little prospect of a fee increase next year, or any year thereafter. So the effect compounds. And ultimately becomes unsustainable.

So if 6% of the fee base is R3billion, lets say that the total fee base of RSA universities is in the region of R50 billion per annum. Now that’s a different matter. That cannot be financed on the current tax base. It just can’t! And RSA cannot borrow any further; our national debt is maxed out.

And, depending on how you look at it, neither should free education for all be a consideration in RSA. This is a debate similar to the VAT debate around zero rating of basic foodstuff.

Prima facie nothing sounds better than a complete exemption. But then everyone gets it, rich and poor alike.

So the wealthier parents of students also scored thanks to #feesmustfall. If the fee is currently R50 000, they save R3000. And that’s enough to buy a decent crate of whiskey.

During the recent lectures of Thomas Piketty he showed how, in the USA, college attendance is heavily dependent on the parents income. The situation must be even more skewed in RSA.


College Attendance Rate vs. Parent Income Rank in USA


In recent research conducted by the IMF and the Davis Tax Committee the following graphic showed, according to income deciles, who enjoys the benefit of VAT zero rating of basic foodstuff.


VAT revenue foregone on selected zero-rated goods, in Rmillion:

VAT revenue foregone on selected zero-rated goods, in Rmillion

The conclusion reached was that the rich obtain substantial benefit from a blanket zero rating and thus the practice should not be extended. It must always be better rather to collect the revenue and redistribute the additional income through a targeted transfer to the poor.

It would be most interesting to get some more statistics on who actually enjoys the lions’ share of #feesmustfall. The top deciles probably got most of it, because so few of the students of the poor have any prospect of getting to university.

Now, in the context of fees, the wealthier parent gets hacked off. They say it is the taxes they pay that keep the universities going anyway. Why should they be excluded from #feesmustfall?

So where is a solution?

I am going back more than 30 years now, when I was a 4th year student at Rhodes and ran out of money.

The deal at the time was produce a decent academic record and your parents’ most recent income tax assessment and your final year’s residence fees were waived. My dad was a teacher, so I got it.

There is an important aspect in the story. Way back then Rhodes gave post graduate students residence bursaries so that residences kept a wide cross section of students. And, at the time, the biggest advantage of staying in residence was that the senior students helped those struggling below. They acted as tutors. They really did! And it worked!.

The most successful student program in RSA is the SAICA’s Thutuka project. And the essence of the program is not just that fees get paid. Students have to have extra assistance, not an option. And it’s paid for.

Another aspect of Thutuka is that it doesn’t just work on handouts. Thutuka is substantially funded by SAICA, the business community and the SETAs. It is a true partnership between student, university, business and government.

RSA cannot afford a blanket exemption on university fees. Unless perhaps we abandon important projects such as National Health Insurance. And that, with all due respect to #feesmustfall,  just cannot happen.

But if we really think and talk about all aspects of transformation of universities we can make a plan that would be equitable for all. No doubt.

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